Import of urea: approval by ECC turns out to be mega scandal

The import of 0.3 million tons of urea recently approved by the Economic Co-ordination Committee (ECC) of the Cabinet has reportedly turned out to be a mega scandal as two ministries are challenging each other”s definition of “emergency”. This issue will again be tabled before Finance Minister Ishaq Dar at a meeting of ECC scheduled for Thursday (today), well informed sources in TCP told Business Recorder.

The ECC had approved the import of 0.3 million tons of urea recently while setting aside the observations of Public Procurement Regulatory Authority (PPRA) which opposed the proposal saying that “there is no emergency at present”. According to relevant rules, a minimum period of 30 days is mandatory for International Competitive Bidding (ICB) to submit applications from the date of publication of advertisement notice in press whereas TCP gave only seven days, which has been found to be a violation of PPRA 2004. Ministry of Industries and Production argues that the urea supply situation is alarming and unless this commodity is imported at the earliest, the country will face a severe shortage during the present Kharif season. In order to ensure timely import, Commerce Ministry had requested for a gallop tender entailing exemption from PPRA Rules 2004 as per following: (i) the condition laid down under Rule 13 PPRA Rules 2004 regarding international tendering response time of 30 days for gallop tendering may be reduced to 7 to 12 days; and(ii) price matching may be allowed.

Ministry of Industries had declared emergency as per relevant rule of PPRA 2004 and directed the Commerce Ministry and Trading Corporation of Pakistan (TCP) to procure 0.3 million tons of urea for immediate crop use of the country for Kharif season 2013 through an international tender with seven days response, the sources added. Ministry of Industries reviews the fertiliser demand and supply situation and communicates its needs to the ECC accordingly and this time keeping in view the shortage in supplies due to less domestic production and demand of the growers, the ECC decided to import 0.3 million tons of urea. According to sources, Industries Ministry argues that keeping in view the shortfall of 0.3 million tons urea with a buffer of 0.2 million tons, the government needs to import a total of 0.5 million tons urea for Kharif 2013. At current international price, TCP would require $172 million.

The sources said Transparency International Pakistan had refused to attend urea tender on the plea that the procurement is against the PPRA Rules 2004. Transparency International Pakistan had advised the TCP to postpone the tender for at least one week and simultaneously requested PPRA for curtailment in the time period as the procurement was required urgently. Transparency International Pakistan also argued that international prices of urea are coming down and in the last two months it has declined by 25 per cent from $400 (FoB) to $300 (FoB) and the delay in the process in this procurement is also expected to benefit Pakistan.